Operator : Good day, and welcome to the Ameris Bancorp Second Quarter Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Nicole Stokes, Chief Financial Officer. Please go ahead.
Nicole Stokes : Great. Thank you, Dave, and thank you to all who have joined our call today. During the call, we will be referencing the press release and the financial highlights that are available on the Investor Relations section of our website at amerisbank.com. I'm joined today by Palmer Proctor, our CEO; and Doug Strange, our Chief Credit Officer. Palmer will begin with some opening comments, and then I will discuss the details of our financial results before we open up for Q&A. Before we begin, I'll remind you that our comments may include forward-looking statements. These statements are subject to risks and uncertainties. The actual results could vary materially. We list some of the factors that might cause results to differ in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements as a result of new information, early developments or otherwise, except as required by law. Also during the call, we will discuss certain non-GAAP financial measures in reference to the company's performance. You can see our reconciliation of these measures and GAAP financial measures in the appendix to our presentation. And with that, I'll turn it over to Palmer.
H. Proctor : Thank you, Nicole. Good morning, everyone. I appreciate you taking the time to join our second quarter earnings call today. Core fundamentals at Ameris remained strong in the second quarter, highlighted by several key metrics. First, we achieved core profitability levels well ahead of the industry with adjusted ROA of 1.53%, adjusted PPNR ROA of 2.24% and adjusted return on TCE of over 14%, even with our high capital levels. Second, we experienced profitable growth this quarter with average earning assets increasing 8.5% annualized and loans over 6% annualized. For the first 6 months of the year, we've organically grown the balance sheet by almost $1 billion while improving our margin. Third, our balance sheet remains strong, funded with almost 50% checking accounts and over 11% tangible common equity. Finally, our continued expense focus kept our adjusted efficiency ratio at 50%. Year-over-year, we grew adjusted revenue by 6%, while keeping adjusted expense growth at just 3%, which highlights our ability to generate organic profitable growth and positive operating leverage. In addition to these positives, our loan production was $2.4 billion in the second quarter, which represents a 24% increase over the second quarter last year, and our loan pipeline remained robust at $2.7 billion. On the deposit side, our average deposits grew 4.4% annualized for the quarter. While we saw ending balances down, it's related to some quarter-end customer movement and not related to any loss of the relationships. Our focus continues to be on core granular deposits and relationship banking with our noninterest-bearing deposits remaining strong at 30% of total deposits. Reported expenses were impacted by an $82.5 million litigation accrual related to a jury verdict in an employment case in California. Despite our planned appeal, we accrued the full amount of the verdict plus related costs this quarter in accordance with appropriate accounting guidance. With this being ongoing litigation, we are unable to comment any further on that. Despite this accrual, we had positive earnings, and we grew tangible book value per share in the quarter due to our strong core profitability. Moving on, we continued returning capital in the quarter by repurchasing $19 million of our common stock, which brings year-to-date buybacks to approximately $94 million or roughly 1.7% of our shares outstanding. Our capital levels remain robust with CET1 at almost 13% and our TCE ratio above 11%. These capital levels position us well for future growth in our attractive Southeastern markets. Credit quality was stable and clean in the quarter. Our 1.62% reserve was unchanged and both net charge-offs and NPAs were stable at very low levels. Overall, our core fundamentals remained strong in the second quarter as we continue to grow our Southeastern footprint. As we recently announced, we are also excited to be expanding Ameris' footprint into the attractive Nashville, Tennessee market, which should be additive to our longer-term organic growth profile, and we're glad to have found a solid team of Nashville-focused bankers that have joined our growing franchise. I'll stop there and turn it over to Nicole to discuss our financial results in more detail.
Nicole Stokes : Great. Thank you, Palmer. We reported net income of $51.4 million or $0.77 per diluted share in the second quarter and adjusted net income of $107.3 million or $1.60 per diluted share when you exclude the litigation accrual and the Visa B and BOLI gains. Our adjusted return on assets was 1.53%. Our adjusted PPNR ROA was 2.24%, and our adjusted return on tangible common equity was 14.08% for the quarter. Tangible book value increased to $45.10. Our net interest margin was stable this quarter at 3.88%, with a 4 basis point positive impact from higher asset yields, exactly offsetting the increase in funding costs. This margin is well above peer levels and is 100% core without any purchase accounting accretion from M&A. Our asset liability sensitivity remain's effectively neutral, meaning any future interest rate movements likely have minimal impact on our spread income and margin. As I previously said, we do anticipate some slight margin compression over the next few quarters due to higher deposit costs to fund our balance sheet growth. We believe the margin could decline just a few basis points per quarter over the next couple of quarters. But we will continue to focus on growth in net interest income or growth in NII through our continued earning asset growth. Adjusted noninterest income decreased $4.6 million this quarter, mostly from mortgage-related revenue. And our adjusted noninterest expense increased about $3.1 million, and that was really driven by 2 things: higher legal costs and charitable donations. Our adjusted efficiency ratio in the quarter improved over 130 basis points from -- to 50.4% this year from 51.7% last year. This was driven by positive operating leverage as year-over-year adjusted quarterly revenue was $17.4 million or 6% compared to adjusted expense growth of just $4.8 million or 3%. I continue to anticipate our efficiency ratio to be slightly above 50% for the rest of the year. During the second quarter, we recorded $17.3 million of provision expense. Annualized net charge-offs decreased to 20 basis points. We continue to anticipate net charge-offs in that 20 to 25 basis point range for the remainder of 2026, and our reserve remained strong at 1.62%, the same as last quarter. Overall, asset quality trends remain strong with nonperforming assets and net charge-offs relatively stable in the quarter, both at low levels. Looking at our balance sheet, we ended the quarter with $28.5 billion of total assets compared to $28.1 billion last quarter. Our average earning assets grew $544.6 million or 8.5% annualized as we grew both loans and the bond portfolio. Loans grew $349.9 million or about 6% annualized, and our loan production and pipelines remain strong. Loan growth was diversified through C&I, including premium finance, mortgage warehouse and equipment finance as well as construction and owner-occupied CRE. As Palmer mentioned, we saw some end-of-quarter deposit movement that left ending deposits down about $49 million, although our quarterly average balance grew over $240 million or about 4.4% annualized. And total noninterest-bearing deposits grew during the quarter. It grew by $33.9 million, and that helped improve our NIB to total deposit ratio to 30% from 29.8% last quarter. We project loan and deposit growth in the mid-single-digit range for the year, and we expect that longer-term deposit growth will be the governor of our loan growth. Capital levels finished the second quarter strong with TCE at 11%, CET1 at 12.8%. We were again active in our share buyback during the quarter. We repurchased about 226,600 shares at an average price of $83.71 per share, and that brings our year-to-date share buybacks to $93.8 million or about 1.7% of the company -- 1.7% of the company, and that was at an average price of $79.72. Our remaining share repurchase authorization was $65.4 million at the end of the second quarter. And with that, I'm going to wrap it up and turn the call back over to Dave for any questions from the group.
Operator : Our first question comes from Catherine Mealor with KBW.
Catherine Mealor : I wanted to start just with the margin. It looks like the deposit costs were up just a little bit, and that was offset by asset yields. But if we look into the asset yields, it looks like a lot of that came from the bond portfolio. And I was just curious if you can speak to what drove that? And is this higher level of bond yields a good run rate? Or is some of that going to pull back in the coming quarters?
Nicole Stokes : Thank you. We did have a bump of about 40 basis points in our bond yield, and that really comes from -- we have some TIPS, some inflation bonds and there's about a quarter delay in that. So prior bump in inflation caused us a bump in the bond yield there. But then we also did swap out some bonds and picked up a little bit there. So that bumped in because of that inflation was about 3 basis points of margin. Margin would have actually declined had we not had that. So the yield -- those bond yields should come back down just a little bit going forward.
Catherine Mealor : Okay. Great. And as I look at loan yields, that was down just 1 basis point. So it's been very steady. As you think about where new loan pricing is coming, do you feel like there's some upward momentum in your loan yields in the back half of the year? Or are we just more steady at this level?
Nicole Stokes : Yes. So when we look at our loan production, and it's interesting because we did have some elevated CRE payoffs. And so a good data point there is the CRE -- the payoffs had about a weighted average rate of about 5.04% and you compare that to our total company production this quarter of 6.20%. And if you look at just the core bank, kind of take out the premium finance, the mortgage, SBA and equipment finance, the core bank came on at 6.39% for the quarter. So we definitely saw some good kind of the lower rate coming out off and then the newer stuff coming in higher. So that certainly helped. And we kind of have seen that trend now for a couple of quarters.
Operator : And the next question comes from Christopher Marinac with Brean Capital.
Christopher Marinac : I wanted to ask about the reserve and losses and kind of how we should think of this as well as kind of managing capital. So I think it's 25 quarters since you adopted CECL. We've had great experience for many, many years now on losses. Do you look at the reserves kind of combined with capital as you kind of manage strategic ideas, buybacks, et cetera? And do you see any possibility to kind of look's differently at the reserve as time passes?
Douglas Strange : Chris, this is Doug. The reserve, we continue to be model-driven with our Moody's. And if you look the model, we've primarily gone to a 50-50 weighting. We did go to 60-40 with the S2 last quarter with the war breaking out. But we've kind of returned to that stride of 50-50. And as a result of that, we've kind of maintained that 1.62% ratio, which is among top of peer. If you add the unfunded, it's 1.86%, which gives us about almost 9-year coverage on the net charge-offs.
Christopher Marinac : Okay. And just given the level of criticized being somewhat stable again, should we think about the kind of low 20s charge-off rates still being sustainable?
Douglas Strange : Yes. I'll reiterate what Nicole touched on in her comments. For the year, we are providing guidance of 20 to 25 basis points.
Christopher Marinac : Okay. But even beyond this year, that -- it still sounds like there's no reason to change that.
H. Proctor : Correct.
Christopher Marinac : Okay. And then, Nicole, should the buyback just be ongoing much as you have been? Is there any reason to think differently just in terms of pace or percentage of earnings that you redeploy?
Nicole Stokes : Chris, one of the things that we're really pleased with is that so far this year, what we've bought back was at $79.72. So I think the buyback, there's still definitely an option for the buyback. But with our price being where it was, I certainly liked buying at $79 more so than today. But I think we also are accreting capital and growing into capital. And even with our growth and the way the quarter came out, we still have really strong capital. So I think we have it in our pocket, but I don't think you're going to see as aggressive as what you saw in the first quarter. I think the second quarter was probably a more normalized level if we continue to buy at all.
H. Proctor : Yes. But we'll just remain opportunistic with that.
Christopher Marinac : Got it. Okay. And then last one for me is just about Nashville. I'm just curious how we should think of Nashville as an opportunity relative to many years of going into the Carolinas and other markets for Ameris.
H. Proctor : Yes, it's clearly an emerging opportunity for us. But we do not take lightly moving into a new market just for the sake of going into a strong growth market like Nashville. We like to find talent, and we were very pleased with the group that we brought on board, and that's really what encouraged us to make the move. So I think we've got high expectations just given the market and given the level of confidence we have in this new team. So we're looking forward to continuing to grow in that market or beginning to grow in that market and more to come on that as we move forward.
Operator : And the next question comes from Jacob Morton with Stephens.
Jake Morton : This is Jake Morgan on for Russell Gunther. I want to start out on the loan growth. I hear you with the mid-single-digit guide. I'm just wondering if you could discuss the outlook from an asset class and geography-mix perspective for the second half.
H. Proctor : Yes. We are probably more encouraged now than we've been in long term in terms of the outlook for growth, and that's really across all our verticals. So when you look at the different lines of business. And more importantly, when you look at the pipelines, they continue to grow. And I think you're seeing some of that growth in the industry this quarter, but I think it will continue right now, and that's across our entire Southeastern footprint. So there's not any one area that's surging more than the other. It's been very has been very consistent. And in terms of the geographics of it, it's throughout every state we have. So that's very encouraging for us to see. So I would expect to see -- we feel very confident in our mid-single-digit estimates there in terms of growth. But remember, too, that we're always going to have the governor in terms of making sure that our funding is in place to accommodate that growth.
Jake Morton : Got it. I appreciate that. And then on broker deposits, we saw an increase of $174 million during the quarter, and I see you're now at 6.7% of total deposits. I'm just wondering if we're going to see more increases like this and remain a larger part of the funding mix? Or was this more really to offset the seasonal public fund trends?
Nicole Stokes : Yes, you're exactly right. It's really an offset of the seasonal public funds. It's interesting that what we're seeing competition-wise in our market is that we're seeing some of our peers actually pricing above brokered costs. And so because we do have such a small amount of brokered, we chose to go into some brokered to backfill and to not compete on some of those hot deposits. And then again, we have the cyclical public funds that will start coming back in end of the third and into the fourth quarter, that's usual for us.
Operator : And the next question comes from Zita Lopez Wong with D.A. Davidson.
Zita Lopez Wong : I'm calling in on behalf of Gary Tenner. I wonder what was the driver for the pickup in the taxable security yield? And how are you thinking about additional investment going forward?
Nicole Stokes : Sure. So the bump in the taxable yield was related to some TIPS or inflation bonds that we picked up a bump there. And then we also did a trade out of some of those bonds. So that helped. That kind of onetime was -- ended up being about 3 basis points of margin. But then we do continue to see some room in the securities book. We have about $240 million that mature in the third quarter in the low 4s. So looking at repricing about $240 million, up between 75 and 90 basis points within the third quarter. So we continue to watch that and monitor that. We've been rebuilding the bond book for 2 years now. And so we're getting closer to that 9%, 10% of earning assets. And so now it's just kind of stabilizing that.
Zita Lopez Wong : Perfect. And another question. There seems to be an inflection point on the deposit cost this quarter in NOW and also MMA, which you have been telegraphing for a while. So how are you thinking about the trends going forward from here? And from a marginal spread perspective, do the higher market rates help offset that, at least in the short term?
Nicole Stokes : So we do think that we see both loan and deposit pressure in our markets, but we definitely see the deposit pressure out there, probably a little bit stronger. And so I think our bankers have done just a really good job of keeping the relationship, managing relationships, being a relationship bank. That's really part of where our noninterest-bearing being such a high percentage of our portfolio helps us. And we really do focus on the relationship, which includes the noninterest-bearing when we get the relationship. And so -- but we do think that, that's part of our margin guidance going forward of coming down a few basis points as we see and have to pay up a little bit for deposits in order to continue to fund the loan growth that we expect.
Zita Lopez Wong : Perfect. One last question, I'll just squeeze it in. Your NIM was stable this quarter. And like you said, the seasonally lower deposit will come back in the third quarter and a reduction -- and there's also a reduction in the FHLB borrowing. There seems to be a setup for NIM expansion in Q3. Would you put some more color on that, please?
Nicole Stokes : Yes. So a lot of it comes from that deposit -- the competition on the deposit side. So when you look at kind of our loan and coming on rates of loans and deposits with our all-in with noninterest-bearing, our growth is still accretive to the margin, but that's assuming a 30% growth in noninterest-bearing. And that's a really tall standard to have. So if we end up to fund our future growth, if we end up growing some of the interest-bearing at a faster pace than that noninterest-bearing, from an interest-bearing perspective, our growth -- if you just look at interest-bearing deposits, it tends to be a little bit dilutive to the margin. So that's where our guidance comes in saying that we think those deposit costs could drive the margin down a little bit. This quarter, we really had -- we had great results on the loan side and the loan yields. And then we also had that kind of onetime bump on the bond portfolio that kept us from bumping down a little bit. But if we don't have those one-offs next quarter, we could see a few basis points of compression.
Operator : And the next question comes from Stephen Scouten with Piper Sandler.
Jackson Andrew : This is Jackson Andrew on for Stephen. I appreciate all the color so far this morning. Just kind of wondering about if you could talk a little bit more about kind of your mortgage outlook. What are you expecting for the second half of the year?
H. Proctor : Yes. I think if you look at mortgage, the production there was still solid. It remains consistent in terms of what we're delivering there. We did balance sheet a little bit more this quarter than we did sell, and therefore, that obviously impacts the gain on sale. And then -- so I think in terms of the stability of it, we're managing costs very closely there. But given the high interest rate market that we're operating in, until we see a little relief there, I don't think we'll get the incremental lift that we had all expected as an industry in the second half of the year unless we start seeing some relief. But all in, it continues to perform well for us, and it continues to be managed very well.
Jackson Andrew : Got it. And then just one more on hiring. What kind of pace can we expect to see here in the back half of 2026?
H. Proctor : Yes. As we've said before, we've got all the talent we need to meet our budget, meet consensus in terms of expectations for growth. So we're selective in our talent. We're always looking to identify new talent and new opportunities like we have in Nashville. But in terms of the need for us to have to go out and hire a bunch of bodies to hit our growth expectations, that's not a challenge for us at this point. So we feel very good about where we stand there. But once again, we remain selective in terms of looking at new bankers out there. We're probably a little more focused on hiring customers than we are bankers, and that seems to work pretty well for our model.
Operator : And the next question comes from Tim Mitchell with Raymond James.
Timothy Mitchell : This is Tim on for David. I want to start on capital. I kind of hear what you said about thoughts on the buyback at the current price, but you're obviously continuing to accrete capital at a pretty solid clip. So outside of buybacks, I mean, is there anything else in terms of balance sheet optimization, obviously, organic growth or M&A that we should think about you guys are interested in?
H. Proctor : Yes. Our priority stack has not changed there. It will remain organic growth first. Then we'll obviously, as we said earlier, we'll be opportunistic on the buybacks. Our dividend is -- we'fine with where the dividend is. And then for us, with M&A, we are very selective and discerning in terms of M&A. And as we've said, it would take something pretty special for us to consider M&A just because we've got a lot of opportunities on the organic growth side. And that remains consistent with our outlook and our story.
Timothy Mitchell : Got it. And then on -- just kind of want to follow up more on the funding side. I've kind of heard what you guys were talking about different puts and takes between NIB growth and interest-bearing growth. But just philosophically, how are you thinking right now just given the competitive backdrop around growing new core relationships maybe at thinner margins versus trying to defend the margin, maybe slowing balance sheet growth a little bit? Just kind of where the loan-to-deposit ratio is, how are you thinking about kind of the funding base and the incremental margins as you grow the balance sheet?
H. Proctor : Yes. I would tell you that with our margin as strong as it is, we are in a position where if we choose to do so, we could sacrifice a little bit of that margin for good solid growth. One of the things you will not find us doing is growth just for the sake of growth. It needs to be profitable growth. And if we can find that type of growth opportunity, then we are willing to sacrifice a little margin for that and are in a position of strength to be able to do that.
Timothy Mitchell : Great. just last one on the Nashville market entry. There's obviously been a lot of disruptions kind of throughout your footprint in the past couple of years. Are there any other markets right now that you're interested in? And could you kind of talk more to the point you made around hiring customers versus talent? Are you seeing a lot of opportunities to take on new customers given some of that disruption?
H. Proctor : We are. And one of the benefits we have is that we already have a presence in most of these markets with obviously the exception of Nashville. But we've already got a presence, already got a brand and already have bankers. And that's -- you're starting there from a position of strength. We've already got the brand awareness. And a lot of times, we've also got some of the wallet share with some of the other banks. And our objective and mission is to garner more of that wallet share. And then as a result, you garner additional market share. We don't really need to move outside of our existing footprints to do that. We've been very fortunate to be in high-growth markets. So in terms of markets outside of our existing footprint, I don't see that is being necessary for us.
Operator : This concludes our question-and-answer session. I would like to turn the conference back over to Palmer Proctor for any closing remarks.
H. Proctor : Great. Thank you, Dave. Core fundamentals remained strong in the second quarter as we continue to expand our attractive Southeastern footprint. And I want to thank every Ameris teammate for their commitment and their contributions, which drove another solid first half and enabled us to continue delivering peer-leading results. As I've said before, we're going to remain focused on controlling what we can control, executing on our strategy with discipline, growing our core deposit franchise and consistently building long-term value through profitable growth, a strong core deposit base and increasing tangible book value per share. Thank you again for joining our second quarter earnings call, and we appreciate your continued interest in Ameris.
Operator : The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
